“Nuclear verdicts” in trucking accidents have caused AIG and Zurich to pull back from providing truck insurance in the for-hire trucking fleet market, according to an October 15 article in the Wall Street Journal titled “Truckers Scramble to Get Insurance.”
Both AIG and Zurich continue to cover truck fleets operated directly by retailers and manufacturers, report brokers. Other insurers are stepping up to fill the void, but many truckers are struggling to replace policies with multiple underwriters. Premiums for truck insurance, also known as inland marine coverage, are rising by 10 to 30 percent as a result of the market shift.
The Lexington Insurance Co. unit of AIG has discontinued truck insurance for fleet coverage, although other AIG units apparently continue to write coverage. AIG is in the process of streamlining operations in order to improve profitability overall, as we wrote about in an earlier blog post titled, “AIG Panel Counsel Program in Context.”
The 2014 New Jersey accident involving a Wal-Mart Stores Inc. truck, which received widespread media attention due to the involvement of comedian Tracy Morgan, resulted in a $10 million settlement for the children of the man who was killed. Other parties settled separately for undisclosed amounts.
Additional recent multi-million trucking verdicts include:
- $281 million awarded by a Texas jury in 2013 to a man killed in a trucking accident. The award was later reduced to $105 million, and then settled for an undisclosed amount.
- $42 million in a settlement between Landstar Systems Inc. and the widow of a driver who was hit and killed by a big rig. Landstar is reportedly self-insured up to $5 million per accident, and had relied heavily on AIG for coverage in the past.
- Insurance broker AON, which tracks data on trucking cases internally, has observed six cases of $20 million or more this year alone, which is the most it has seen since 2012.
Plaintiff attorneys reportedly shifted strategies starting in 2011. Rather than focusing on the individual aspects of a specific trucking accident, they are finding patterns of safety violations and non-compliance with federal regulatory standards within a defendant trucking company. The new legal approach appears to be working, opening up new avenues to punitive damages.
Trucking companies must cover drivers with truck insurance of up to $750,000 per accident under federal regulations, and many round up to $1 million per incident on a self-insured basis. This primary level of coverage can be supplemented with additional tiers of secondary insurance.
Ironically, safety numbers for trucking accidents are actually improving. The Transportation Department reports a 20 percent decline in fatalities involving large truck in the past ten years, although there was a slight increase last year.
In a separate but related note, weakness in the freight transportation industry is putting a damper on new truck sales. Unsold inventory of over 65,000 Class 8 trucks—those used most often on long-haul routes—are sitting on dealer lots following a 37 percent decline in March sales from the year earlier period.
About 67,000 Class 8 trucks are sitting unsold on dealer lots, after sales in March dropped 37% from a year earlier to 16,000 vehicles, according to ACT Research. Class 8 trucks are the type most commonly used on long-haul routes. The last time truck inventories reached this level was in 2007, according to an April 5, 2016 article in the Wall Street Journal titled “Heavy-Duty Truck Orders Plunge.”
Implications for Insurance Defense Law Firms
Law firms that participate in the AIG or Zurich panel counsel program for truck insurance in the for-hire sector may find themselves scrambling to keep the pipeline full as the two carriers withdraw. Just as for-hire truckers are cobbling together multiple underwriters to maintain coverage, insurance defense law firms will want to quickly explore opportunities with other carriers as well as self-insured truckers.
Help with Legal Marketing for Insurance Defense Firms
If your insurance defense law firm is asking how you can get on more insurance panels, give us a call.
Legal Expert Connections, Inc. offers three key benefits to insurance defense law firms nationwide:
- We are the leading U.S. legal marketing agency specializing in the insurance defense market. We know the panel counsel process, and focus on helping you get new engagements.
- Save time and money. You get quality results without the need to invest in senior in-house marketing / business development staff with the associated overhead expense for office space, equipment, and benefits.
- Increase revenue with professional, on-going legal marketing campaigns. We do the research to identify insurance panel managers, so you can accelerate your business development process.
Disclaimer on Source Material
Information from this article is collected from various industry reports. It is believed to be reliable but is not guaranteed.